Equity Investments in the current COVID-19 scenario & what should be the strategy?


Equity Markets are booming even though the country is showing slow economic growth due to the ongoing COVID-19 crisis. The Covid-19 pandemic has severely impacted the global financial markets and the Indian stock market also has suffered a lot since it peaked in February 2020 and then crashed heavily after the outbreak of the pandemic in March 2020. However, the markets are handling the second wave of Covid-19, confidently. The reasons being: no full-scale lockdown in the country and availability of vaccines to all adults.

The Financial Sector in India 

The Financial Sector in India has undergone massive reforms over the past few years with new regulatory policies being formed which have strengthened the economy and have eventually boosted the investment capacity and productivity of the investors. In the decade that has gone by, the finance sector has seen a radical change in the form of digitization wherein the banks and NBFCs have taken up the format of mobile banking, cloud banking and has seen a rise in fintech companies supporting the same. This digitization will help the customers greatly in these difficult times. To boost the slowing economy, the government has made various policy announcements and have followed them up with the necessary execution.

The Surge in Covid-19 Cases and Market Outlook

With the increasing number of cases in the country, investors are fearing another stock market crash like the last year. What should an investor do, if there’s another probable lockdown in the country? What should be your strategy? 

As we can see, there is enough volatility in the market, but analysts say that a fall in the benchmark indices like that in February 2020, would be highly unlikely, as the markets seem to have accommodated and improved for the near future. Most of the investors will observe, think and invest looking beyond the pandemic for now. Even if there is a dip in the market levels now or then, the investor should look at it as an opportunity to invest for the long term.  Sectors like manufacturing and IT have settled and gained pace. Also, sectors Such as Chemicals & fertilizers, Pharma, IT services, FMCG and Telecom are showing strong potential despite the lockdown, but banking, real estate, media, retail, and engineering might be affected negatively if there is an impending lockdown. 

It is advisable not to take any new position in the short term. An effective strategy should be to invest aggressively in quality stocks for long-term view and in a systematic manner too. Diversification of your investments may shield your investment from a highly volatile market scenario.

 All in all, analysts suggest investors be aware and careful while investing and not be frightened by short-term volatility and to look at the long-term view in the coming period.

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